How to Finance a Pool Installation

by Christopher Raines

In-ground pools require large amounts of labor and materials.

A swimming pool for your home provides you recreation and leisure on your own terms and time. However, having a pool installed is a sizable and expensive undertaking. According to the Better Business Bureau, in-ground pools are more costly than above-ground pools because the former involve much more labor and materials, especially in moving dirt, digging holes, pouring concrete and putting in a pool liner. Even above-ground pools can run a few thousand dollars. Loans afford the most viable way for homeowners to buy a pool. The way you finance a pool installation determines how you can protect against bad work, whether you can access tax deductions and whether you face foreclosure if you can't repay.

Seller Financing

Finance directly with the dealer. Many pool installers offer seller financing. Typically, the pool dealer uses a finance company connected or chosen by it to "loan" you the money; in reality, the dealer transfers the right to get paid to the finance company. As buyer, you sign a "Retail Installment Contract," which by law tells you, among other, things the exact purchase price and how much you are borrowing; you avoid the guesswork in determining how much you need to finance. The installment contracts provide that if the dealer doesn't install the pool or does it poorly, you can cancel the deal or get at least a partial refund.

First Mortgage

Pour the pool installation costs into a first mortgage, especially if you are building your home from scratch or your bank will let you. For the purchase of an already-constructed home, your bank might not include pool installation in the loan for the purchase if you don't include the pool in the sales contract. If you can't or if the bank will still not go along, you can get a separate construction loan for the pool; look particularly for a mortgage company specializing in pool installations. Don't rely upon government-backed or supported loans for financing; programs, such as the United States Department of Agriculture's Rural Development Program don't allow financing for in-ground pools because they are considered luxury items.

Home Equity Loan

You can borrow your home equity to finance a pool. With a home equity loan, you take the difference between what your home is worth and how much you owe on it. The bank will set your loan or credit limit at a certain percentage of the net worth, typically 85 percent. According to the Federal Trade Commission, many home equity loans have variable interest rates; you pay less interest at the beginning and more later. You can write off interest payments on your taxes; however, you risk losing your home if you miss or can't make payments. Also, you will be stuck with the loan obligations even if the installation goes bad, because the mortgage company or bank is not connected with the pool installer.

Credit Cards

The plastic in your wallet or purse can fund a pool installation without putting your home at risk. Credit cards offer unsecured financing; the company does not get your home as collateral. However, you must have cards with high credit limits and low balances, especially if you want an in-ground pool; to get the high limits, you need a sterling credit record and great credit score. Credit card interest rates normally run higher than mortgage interest rates.

Alternate Options

A pool membership or trips to the public pool can afford you as much recreation and fun with little headaches. Your own swimming pool can cost you dearly in maintenance and expose you to lawsuits. Smart Money cites these pitfalls as reasons that swimming pools do not enhance your home's value or prospects of resale. Also, unless your weather is warm year-round, you likely will get less use from your own pool than a pool at a fitness club or recreational center. Check with your local parks and recreational department or a swim club for indoor, year-round or heated swimming pools.

About the Author

Christopher Raines enjoys sharing his knowledge of business, financial matters and the law. He earned his business administration and law degrees from the University of North Carolina at Chapel Hill. As a lawyer since August 1996, Raines has handled cases involving business, consumer and other areas of the law.